Analyst: Bitcoin On-Chain and Derivatives Data Show Optimistic Market Sentiment

Data from CryptoQuant and Deribit suggests traders are bracing for further price gains as bitcoin continues to recover - the price is currently up more than 22 percent from its recent low of $49,500 on Aug. 5, according to The Block. CryptoQuant charts show that bitcoin reserves on centralized exchanges have fallen to their lowest level in years in August. Since the end of July, the supply of bitcoin on exchanges has fallen from more than 2.75 million to around 2.67 million, a 3 percent drop in the past 30 days. The data also shows that bitcoin supply on centralized exchanges has dropped a remarkable 11 percent since the beginning of the year. Meanwhile, the price of bitcoin has risen nearly 43 percent since the beginning of January. A decrease in the number of bitcoins on exchanges typically weakens supply pressures and supports the potential for price gains.

SynFutures co-founder Rachel Lin outlined derivatives market indicators that suggest traders are bracing for bullish bitcoin price action. lin said, “On the derivatives side, market sentiment remains bullish. For Bitcoin, the highest open interest is in the $100,000 calls expiring in December.” Deribit's metrics for all upcoming expirations show that the highest option concentrations are in the $100,000 and $105,000 calls. The data also shows that the most heavily traded option contract over the past 24 hours was a call expiring at the end of the month with an exercise price of $75,000. lin added that the derivatives market is equally optimistic, with the largest open interest being in the $4,000 strike call expiring in September, followed by the $6,000 strike call expiring in December. lin also pointed out that the distribution of outstanding contracts in the distribution of open interest contracts, puts are significantly under-represented. She said, “Notably, the top 10 open positions in Bitcoin and Ether are all calls, with no significant puts.”